The Day at a Glance | October 2 2023

*China´s economic activity accelerated its pace of growth in September and was backed by a rebound in industrial activity.

*In the Eurozone, the unemployment rate reached a historically low level in August.

*US Congress reached a last-minute agreement that temporarily averted a government shutdown by extending funding until November 17th. 

*The Financial Stability Council updated its risk assessment. The document highlighted the continued presence of inflationary pressures, along with the fact that financial markets in Mexico continued to exhibit overall orderly behavior. The Council pointed out that the Mexican financial system continues to demonstrate resilience and a strong position.

*In Mexico, business confidence in the manufacturing sector set at 53.8 points, 0.1 points higher than the previous month and 2.9 points higher than a year ago, marking 28 consecutive months of setting in expansionary territory. Similarly, the construction sector (53.2) and non-financial private services (58.7) both logged monthly and annual progress, with only the trade sector declining by 0.8 points to 55.7.

*The INEGI’s manufacturing orders indicator (PMI´s) decreased by 0.27 points in September to 51.9 due to deteriorations in the employed personnel (50.8), supplier input deliveries (48.3), and input inventories (46.1) categories.

*More than 75,000 healthcare sector employees in the United States could start a strike this Wednesday.

Economic environment

China´s official leading indicators are signaling there was an improvement in the country’s economic activity in September. The composite PMI recorded a second consecutive acceleration with a 52.0 point in September. This improvement stemmed from a rebound in economic activity, which returned to expansionary territory by logging a 50.6 point figure after five consecutive months below the 50-point threshold. The components of production (52.7), new orders (50.5), and purchases (50.7) all logged acceleration compared to the previous month, accompanied by a reduced contraction in foreign sales (47.8). Furthermore, both input costs and selling prices accelerated to 59.4 and 53.5 points, respectively, while confidence in the sector remained virtually unchanged at 55.5. On the other hand, the non-manufacturing sector marked its ninth consecutive month of expansion, with a 51.7 point reading, a three-month high, backed by more moderate contractions in new business (47.8) as well as foreign shipments (49.4). Similar to the manufacturing sector, variations in input costs and selling prices accelerated as they logged 52.5 and 50.3 point figures; however, in this case, the sentiment sub-index did improve, as it logged a 58.7 point reading, up from the eight-month low logged in August (58.2). With this, September´s figures provide further signs that the economic recovery is underway, and are backed by recent measures implemented by the authorities. However, it´s worth noting that the industrial sector is still under pressure due to high input costs and some financial constraints, which points to the need to ensure the proper implementation of policies promoted by the authorities to consolidate economic stabilization and recovery.

The unemployment rate in the Eurozone fell to a historically low 6.4% in August. This figure matches June´s and is a slight upward revision from the 6.5% reported in July, which had previously been reported as 6.4% as well. As a result, the number of unemployed individuals decreased by 107,000 to 10.856 million. Additionally, among the countries in the block, Germany recorded the lowest unemployment rate, at 3.0%, while other major economies in the region reported relatively high rates, such as Spain at 11.5% and both Italy and France at 7.3%, showing only marginal decreases compared to the previous month. In a more general sense, most countries either maintained or decreased their unemployment rates compared to July. Overall, the most recent employment figures for the Eurozone underscore the resilience and tightening of the European labor market despite economic stagnation. However, preliminary PMI data indicates a loss of momentum in job creation, with the employment sector reaching a nearly three-year low. This suggests there is limited room for further reductions in the coming months.